States Squirm over Health Exchanges

December 5, 2011

For state governments, the coming Supreme Court ruling on health reform isn't an abstract argument about the U.S. Constitution. It's a highly practical question about whether, when and how to proceed with one of the health law's most important and complicated pieces: setting up health insurance exchanges. Already facing political strife over implementation of health reform, some states are wondering if they should sit tight on exchange decisions until the court rules. However, the timetable for their decisions is tight, and could significantly complicated last-second efforts by state legislatures if they choose to wait, says Politico.

June 2012: The Supreme Court is expected to rule on health care, yet this is also the final month during which states can petition the federal government for grant money to fund their efforts to create an exchange.

January 2013: The federal government will assess each state's progress towards creating an exchange and will begin creating federally-run exchanges for those states that are unlikely to have exchanges completed in time.

January 2014: Each state must have a fully functioning exchange, whether run by the federal or state government.

Many state legislators want to ignore the timetable and continue to put off the establishment of exchanges until the Court has ruled -- two Midwestern governors have already declared their states won't set up an exchange until that time. And that idea is growing popular among powerful state legislators vigorously opposed to health reform.

Irrespective of the outcome, the dynamic between states and the federal government in creating exchanges has espoused a new source of states' rights tension. Many conservative lawmakers are balking at the idea of a federally-run exchange, with Kansas going so far as to send back a $31 million grant to build one. Regardless, it is clear that much will remain undecided until the Court rules.